After investors were basking in the sun of an extended bull market, the perils of investing have begun to surface in today’s financial landscape. With a confluence of interest rate hikes, de-risking into bonds and trade wars just to name a few, an investor facing today’s market headwinds would be akin to an aviation pilot on a treacherous mission–one false move could spell disaster.

Thankfully, Pacer ETFs developed the perfect co-pilot–the Pacer Trendpilot™ strategy. At the heart of the strategy is its primary radar, the 200-day moving average–a tried-and-true technical indicator widely used by market mavens to identify key trends and the direction they’re most likely headed.

Furthermore, the Pacer Trendpilot™ strategy utilizes an objective, rules-based trend following strategy that adjusts exposure from equities to safe-haven Treasury bills or a combination thereof based on three indicators:

  1. Equity Indicator: 100% Benchmark Index
    When the Benchmark Total Return Index closes above its 200 day simple moving average (200d SMA) for five consecutive business days, the exposure of the Trendpilot™ Index will be 100% to the Benchmark Index. From the equity position, the Index will change to the 50/50 position or the T-Bill position depending on the 50/50 Indicator and the T-Bill Indicator.
  2. Price Signal 50/50 Indicator: 50% Benchmark Index/50% 3-Month US T-Bills
    When the Benchmark Total Return Index closes below its 200 day SMA for five consecutive business days, the exposure of the Trendpilot™ Index will be 50% to the Benchmark Index and 50% to 3-Month US Treasury bills. From the 50/50 position, the Trendpilot™ Index will return to the equity position or change to the T-Bill position depending on the Equity Indicator or T-Bill Indicator.
  3. Trend Signal T-Bill Indicator: 100% 3-Month US T-Bills
    When the Benchmark Total Return Index’s 200 day SMA closes lower than its value from five business days earlier, the exposure of the Trendpilot™ Index will be 100% to 3-Month US Treasury bills. From the T-Bill position, the Trendpilot™ Index will change to the equity position when the Equity Indicator is triggered. The Index will not return to its 50/50 position unless the Equity Indicator is first triggered.

A trend change in the aforementioned indicators will become effective at the market open on the second business day after the indicator for the change is triggered.

4 Choices of Aircraft

The Pacer Trendpilot™ strategy is built into the investor’s choice of aircraft–Pacer Trendpilot US Large Cap ETF (BATS: PTLC), Pacer Trendpilot US Mid Cap ETF (BATS: PTMC), Pacer Trendpilot 100 ETF (BATS: PTNQ), and the Pacer Trendpilot European Index ETF (BATS: PTEU).

Each of the four funds is specifically designed to give investors exposure to specific corners of the market:

  • PTLC: Seeks to track the total return performance the Pacer Trendpilot US Large Cap Index. The index uses an objective, rules-based methodology to implement a systematic trend-following strategy that directs exposure (i) 100% to the S&P 500, (ii) 50% to the S&P 500 and 50% to 3-Month U.S. Treasury bills, or (iii) 100% to 3-Month U.S. Treasury bills, depending on the relative performance of the S&P 500 TR and its 200-business day historical simple moving average.
  • PTMC: Seeks to track the total return performance, before fees and expenses, of the Pacer Trendpilot US Mid Cap Index. The index implements a systematic trend-following strategy that directs exposure (i) 100% to the &P MidCap 400, (ii) 50% to the S&P MidCap 400 and 50% to 3-Month U.S. Treasury bills, or (iii) 100% to 3-Month U.S. Treasury bills, depending on the relative performance of the S&P MidCap 400 TR and its 200-business day historical simple moving average.
  • PTNQ: The investment seeks to track the total return performance, before fees and expenses, of the Pacer NASDAQ-100 Trendpilot Index. The index implements a systematic trend-following strategy that directs exposure (i) 100% to the NASDAQ-100, (ii) 50% to the NASDAQ-100 and 50% to 3‑Month U.S. Treasury bills, or (iii) 100% to 3-Month U.S. Treasury bills, depending on the relative performance of the NASDAQ-100 TR and its 200-business day historical simple moving average.
  • PTEU: The investment seeks to track the total return performance of the Pacer Trendpilot European Index. The index uses an objective, rules-based methodology to implement a systematic trend-following strategy that directs exposure (i) 100% to the FTSE Eurozone Index, (ii) 50% to the FTSE Eurozone Index and 50% to 3-Month U.S. Treasury bills, or (iii) 100% to 3-Month U.S. Treasury bills.

As a testament to the effectiveness of the Pacer Trendpilot™ strategy, during the volatility witnessed by investors during the month of October, which spilled over into the week of Thanksgiving, all four ETFs responded accordingly by heading into the safe confines of Treasury bills.

Trendpilot® ETFs Give Investors the Confidence to Navigate Today's Markets

With the ability to stay invested when the market is trending up, scale back exposure during a downturn and limit draw-downs in equities by shifting to T-bills, these four ETFs allow investors to navigate the markets on autopilot–a peace of mind that’s necessary in today’s market environment.

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